IRS Audits and Criminal Tax Matters

Many taxpayers who receive an examination (“audit”) notice from the IRS often are concerned whether “they could go to jail.” Indeed, problems originate with the tax return as a result of errors or fraud.

The courts have long since opined connecting the audit to criminal tax convictions. In a Ninth Circuit opinion case, United States v. Andy S.S. YIP (2010), the defendant owned a legitimate business but operated “off-the-books.” The court stated the following.

“An IRS audit is an official investigation that may be the first step leading to a criminal conviction for tax violations. United States v. Peters, 153 F.3d 445, 447 (7th Cir.1998). The audit places a taxpayer on notice that the government is looking into the accuracy and propriety of his or her tax returns. Evidence gathered during such an audit properly may be transferred to prosecutors. United States v. McKee, 192 F.3d 535, 544 (6th Cir.1999). The IRS may distinguish between the procedures to be followed during the civil and criminal phases of an audit, Peters, 153 F.3d at 447, but to a taxpayer under suspicion, the latter merely represents an escalating development in the same underlying investigation. Obstruction during an IRS audit justifies enhancing a defendant’s sentence for obstruction “during the course of the investigation.” U.S.S.G. § 3C1.1 (2001).”

Nehemiah Jefferson, Esq., LL.M., is President of America’s Tax Attorney LLC. The tax resolution and advisory firm provides comprehensive Tax Preparation, Tax Representation, Tax Litigation, and Tax Consultation services to individual and small business clients nationwide. He earned his Bachelor’s degree from The Florida State University, his Juris Doctor from John Marshall Law School (Atlanta), and LL.M. in Taxation from the University of Alabama. Attorney Jefferson is licensed to practice law in the State of Florida, The District of Columbia, and is a member of the United States Tax Court Bar. He may be reached at 1-877-575-7765 or [email protected].